Voluntary Deregistration Guide: How to Deregister Your Company Properly

Voluntary deregistration is a process that allows a company to formally close and cease to exist as a legal entity in Australia. This option is available to companies that meet certain eligibility criteria set by the Australian Securities and Investments Commission (ASIC), such as having assets worth less than $1,000, no outstanding liabilities, and agreement from all company members.

Deregistering a company can provide several benefits, including avoiding ongoing compliance costs, reducing legal risk for directors, and properly closing the business. However, it’s crucial to follow the correct steps and ensure all requirements are met before applying for voluntary deregistration with ASIC. This comprehensive guide will walk you through the process, eligibility criteria, and important considerations for successfully deregistering your company.

How to Voluntarily Deregister Your Company?

What is Voluntary Deregistration?

Voluntary deregistration is a process by which a company can formally close and cease to exist as a legal entity. When a company is voluntarily deregistered, it is removed from the ASIC register. This means that the company is no longer required to comply with various regulatory requirements, such as filing annual returns, paying fees, and maintaining financial records.

The effects of voluntary deregistration are significant. Once a company is deregistered, it can no longer operate or engage in any business activities. Any property or assets that the company owned (except for trust property) will vest in ASIC. The company’s officeholders, including directors, are released from their obligations and duties related to the company.

Reasons to Deregister a Company

There are several reasons why a company might choose to undergo voluntary deregistration:

• The company has ceased trading or has no intention to carry on business in the future. This could be due to retirement, change in business direction, or lack of profitability.
  
• The company has little to no assets and has paid all its outstanding liabilities, including employee entitlements and taxes. In this case, maintaining the company would only lead to ongoing compliance costs.
  
• The company is being sold or merged with another entity, making its separate existence no longer necessary.
  
• The company’s directors or shareholders wish to simplify their business structure and reduce administrative burdens.
  

Voluntary deregistration can be an attractive option for companies that have reached the end of their lifecycle or have fulfilled their purpose. By deregistering, the company can avoid the ongoing costs and obligations associated with maintaining a registered company, such as annual review fees, reporting requirements, and record-keeping.

However, it’s crucial to ensure that the company meets all the eligibility criteria for voluntary deregistration and that the process is carried out correctly. Failing to do so can lead to delays, rejections, or even legal consequences.

Eligibility Requirements for Voluntary Deregistration

To be eligible for voluntary deregistration, a company must meet specific criteria set by the ASIC. These requirements ensure that only companies in appropriate circumstances can apply for this process.

Criteria for Deregistration

According to ASIC, a company must satisfy the following conditions to be eligible for voluntary deregistration:

• All members of the company agree to deregister
• The company is not conducting business
• The company’s assets are worth less than $1,000
• The company has no outstanding liabilities (e.g., unpaid employee entitlements)
• The company is not involved in any legal proceedings
• The company has paid all fees and penalties payable to ASIC

To illustrate, consider a small business that has ceased trading, has no significant assets or liabilities, and whose owners unanimously agree to close the company. If this company meets all the above criteria, it would likely be eligible for voluntary deregistration.

However, meeting these requirements alone does not guarantee approval of the application. ASIC may apply further eligibility tests based on the specific circumstances of the company and the nature of its operations.

It’s important to note that if a company applies for deregistration but does not meet all the necessary criteria, ASIC will reject the application. In such cases, the application fee is non-refundable.

Pre-Deregistration Checklist

Before applying for voluntary deregistration, it’s essential to complete a thorough pre-deregistration checklist. This ensures that your company is fully prepared for the process and minimises the risk of your application being rejected by ASIC.

Financial and Legal Preparations

1. Close all company bank accounts, regardless of the balance.
2. Settle any outstanding liabilities, including unpaid employee entitlements, debts, or pending legal claims against the company.
3. Ensure the company is not involved in any ongoing legal proceedings. If there are pending cases, seek legal advice on how to proceed.
4. Pay all outstanding fees and penalties payable to ASIC. Your application will not be approved if there is an outstanding amount on your account.

Asset and Property Management

1. Review all company records and registers to ensure all company property is dealt with appropriately. This may include vehicles, land, shares, trademarks, intellectual property, leases, or permits.
2. Transfer or sell any remaining company assets. Ensure that all transfers of company property are properly registered and that no property remains registered under the company name.
3. If the company was a trustee, appoint a new trustee and ensure that no trust property remains registered in the company’s name.
4. Cancel or transfer any registered business names held by the company.
5. Cancel or cease any licenses held by the company.

By carefully completing this pre-deregistration checklist, you can ensure a smoother voluntary deregistration process and increase the likelihood of your application being approved by ASIC. It’s important to seek professional advice if you’re unsure about any aspect of the checklist or require assistance in preparing your company for deregistration.

Application Process for Voluntary Deregistration

To apply for voluntary deregistration, you must lodge an Application for voluntary deregistration of a company (Form 6010) with ASIC. The current application fee is $49, which must be paid when lodging the form. You can submit the application online through the ASIC website or by mailing the completed paper form.

Lodging the Application

When lodging the application online, you will need to create an ASIC online account if you don’t already have one. After submitting the online application, ASIC will send you an invoice within 14 days with the payment details. You must pay the fee within 28 days to continue with the deregistration process.

When lodging a paper form, the application must be signed by a director or member of the company. A liquidator of the company can also sign the application.

It is an offence to knowingly provide incorrect or misleading information to ASIC, and penalties may apply.

Post-Application Procedures

After submitting your application, there are two possible outcomes:

1. Approval: If your application is approved, ASIC will write to you to confirm your company’s impending deregistration and publish a notice on ASIC’s Published Notices website. Two months after the notice has been published, your company may be deregistered. ASIC will send you a confirmation notice once the deregistration is complete.
   
2. Rejection: If your application is rejected, ASIC will write to you to advise why it has been rejected. If you have any further questions about your application, you should contact ASIC directly.
   

The processing of your application and publication of the notice on ASIC’s website can take up to two weeks, including postage time.

Tax Obligations and Financial Considerations

Settling Outstanding Fees

Before applying for voluntary deregistration, all outstanding fees and penalties must be paid to ASIC. Your application will not be approved if there are any unpaid amounts on your company account. You can check your balance through ASIC’s online services by logging into your account, selecting ‘View company details’ and checking ‘Debtor details’.

You should apply for deregistration at least two weeks before your annual review fee due date. If ASIC publishes the deregistration notice before the review fee is due, you won’t have to pay the fee. For example, if your company’s annual review fee is due on June 1 and the notice is published on May 30, the review fee is not required.

Impact on Tax Returns

The company must finalise all tax obligations with the Australian Taxation Office before deregistration can proceed. This includes ensuring all tax returns and business activity statements are up to date and any outstanding tax liabilities are settled.

You should review all company records to ensure all financial matters are properly addressed. This includes closing any company bank accounts regardless of their balance and ensuring all property transfers are properly registered.

Before proceeding with deregistration, verify that:

• All company tax returns are lodged and up to date
• Business activity statements are finalised
• Outstanding tax debts are paid
• Company bank accounts are closed
• All property transfers are properly registered

Effects of Deregistration

Deregistering a company has significant implications for its legal status and property. Understanding these effects is crucial for company directors, small business owners, accountants, and lawyers involved in the voluntary deregistration process.

Legal and Operational Impacts

Once a company is deregistered, it ceases to exist as a legal entity and can no longer operate or engage in any business activities. The company’s Australian Business Number (ABN) is cancelled, and it is removed from the ASIC register.

Deregistration also affects the company’s ability to be involved in legal proceedings. Any ongoing legal proceedings in which the company is a party cannot continue, and no new legal proceedings can be initiated against the company after deregistration.

Property and Asset Vesting

Upon deregistration, any property or assets owned by the company (except for trust property) automatically vest in ASIC. This means that ASIC becomes the owner of the company’s remaining property.

If the company held any property on trust, such property vests in the Commonwealth, with ASIC acting as the trustee. The former officeholders, including directors, no longer have the right to deal with or dispose of any company property once it has vested in ASIC or the Commonwealth.

It is important to note that the vesting of property in ASIC or the Commonwealth does not extinguish any liabilities or obligations attached to that property. ASIC may take steps to dispose of or deal with the vested property as it deems appropriate.

Conclusion

Voluntary deregistration is a significant process that requires careful consideration and thorough preparation. The process involves meeting specific eligibility criteria, completing necessary documentation, and following proper procedures with ASIC. Understanding the implications of deregistration, from tax obligations to property vesting, is essential for making an informed decision.

When executed correctly, voluntary deregistration provides a clean and efficient way to close a company that has ceased trading. However, it’s important to ensure all requirements are met and obligations are fulfilled before proceeding with the application. This includes settling outstanding debts, managing company assets appropriately, and maintaining compliance with all regulatory requirements throughout the process.

Simplify the legal process with our expert team—call us now.

Frequently Asked Questions